Demoting Jamie Dimon Won’t Fix JPMorgan’s Poor Governance

Jamie Dimon

Should the board of JPMorgan Chase force Jamie Dimon, the bank’s chairman and chief executive officer, to give up one of his jobs ?

Bloomberg Editors write: governance watchdogs, shareholder advisory services and public pension funds say yes. Other large shareholders, some prominent academics and the bank say no. The company will reveal Tuesday how many shareholders support a proposal to separate the jobs (though the vote is nonbinding).

We agree that JPMorgan, a giant of an institution with $2.4 trillion in assets and 256,000 employees, needs stronger checks and balances. Yet we disagree that the only - or even best - way to achieve this is by forcing a demotion on Dimon. There are other means to this end, including regulatory demands for more capital to make JPMorgan safer.

It’s worth remembering that there are plenty of examples of blowups at companies with separate chairmen and chief executives - Enron, HealthSouth Corp. and WorldCom come to mind, as does Barclays Plc with its recent problems over interest-rate fixing. Meanwhile, Wells Fargo, one of the world’s best-managed banks, combines the chairman and CEO jobs.

What matters more than separating the top titles, the level of board independence or the willingness of directors to show up for meetings is a director’s willingness to question management. Although Congress and the stock exchanges have tried, no law or 'best practices' guide can instill that commitment.

Hit the link below to access the complete Bloomberg article:

Demoting Jamie Dimon Won’t Fix JPMorgan’s Poor Governance

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